Oportun Financial (OPRT) - 2024 Q1 - Quarterly Results

Oportun First Quarter 2024 Financial Results Oportun reported a significant reduction in Q1 2024 GAAP net loss and returned to adjusted profitability, raising full-year guidance Executive Summary and Business Highlights Oportun reported a significant reduction in its Q1 2024 GAAP net loss to $(26) million from $(102) million year-over-year, returning to adjusted profitability First Quarter 2024 Key Financial Results | Metric | GAAP 1Q24 | GAAP 1Q23 | Adjusted 1Q24 | Adjusted 1Q23 | | :--- | :--- | :--- | :--- | :--- | | Total revenue (in millions) | $250 | $260 | | | | Net income (loss) (in millions) | $(26) | $(102) | $3.6 | $(58) | | Diluted EPS | $(0.68) | $(3.00) | $0.09 | $(1.70) | | Adjusted EBITDA (in millions) | | | $1.9 | $(20) | - The company achieved a $76 million year-over-year reduction in its GAAP net loss, driven by effective cost reduction efforts that resulted in a 15% sequential and 25% year-over-year decline in operating expenses[2][3] - Oportun raised its full-year 2024 guidance, with the midpoint of the Adjusted EBITDA revision reflecting a 31% uplift and approximately 350% year-over-year growth[3] Q1 2024 Business Highlights vs. Prior-Year Quarter | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Aggregate Originations (in millions) | $338 | $408 | | Portfolio Yield (%) | 32.5% | 31.4% | | Managed Principal Balance (in billions) | $3.0 | $3.3 | | Annualized Net Charge-Off Rate (%) | 12.0% | 12.1% | | 30+ Day Delinquency Rate (%) | 5.2% | 5.5% | Detailed Financial and Operating Results This section provides a detailed breakdown of the drivers behind the Q1 results, including decreased originations, increased portfolio yield, and reduced operating expenses Operational Drivers Aggregate Originations decreased by 17% YoY to $338 million, mainly due to a smaller average loan size, while Portfolio Yield increased by 113 basis points to 32.5% - Aggregate Originations for Q1 were $338 million, a 17% decrease YoY, primarily driven by a reduction in average loan size from $4,075 to $2,918 due to a tightened credit posture[9] - Portfolio Yield increased to 32.5% from 31.4% in the prior-year quarter, mainly attributable to higher fees on loans[10] Financial Results Total revenue slightly decreased by 3% to $250 million, but net revenue surged to $79 million due to favorable fair value changes and lower charge-offs - Total revenue for Q1 was $250 million, a 3% decrease YoY, while net revenue was $79 million, a significant increase from $4.8 million YoY due to a favorable net change in fair value[11] - Total operating expense for Q1 decreased by 25% YoY to $110 million; the company remains on track to reduce operating expenses to $97.5 million or below by Q4 2024[12] Q1 2024 Profitability vs. Q1 2023 | Metric | 1Q24 | 1Q23 | | :--- | :--- | :--- | | Net Loss (in millions) | $(26) | $(102) | | Adjusted Net Income (Loss) (in millions) | $3.6 | $(58) | | GAAP Diluted EPS | $(0.68) | $(3.00) | | Adjusted EPS | $0.09 | $(1.70) | | Adjusted EBITDA (in millions) | $1.9 | $(20) | Credit and Operating Metrics Credit quality improved with stable charge-off rates and decreased delinquency, while operating efficiency significantly improved due to cost management - The Annualized Net Charge-Off Rate for Q1 was 12.0%, a slight improvement from 12.1% in the prior-year quarter[13] - The 30+ Day Delinquency Rate improved to 5.2% at the end of Q1, compared to 5.5% YoY and 5.9% in the prior quarter[13] - Operating Efficiency improved by 1,262 basis points to 44% YoY, while Adjusted Operating Efficiency improved by 1,054 basis points to 41% YoY, driven by lower operating expenses[14] - Return on Equity (ROE) improved to (27)% from (82)% YoY; Adjusted ROE was positive at 4%, compared to (47)% in the prior-year quarter[15] Other Products Secured personal loan receivables decreased 12% YoY to $110 million but are being reintroduced, while credit card receivables also declined 17% YoY - Secured personal loan receivables were $110 million as of March 31, 2024, down 12% YoY; Oportun is prudently expanding this product in 2024, having reintroduced it in Texas and Florida[16] - Credit card receivables stood at $100 million as of March 31, 2024, down 17% from the prior-year quarter[17] Funding and Liquidity As of March 31, 2024, Oportun held $197 million in cash with significant undrawn capacity, though the Cost of Debt increased to 7.5% - As of March 31, 2024, total cash was $197 million, and the company had $591 million of undrawn capacity on its personal loan warehouse line and $16 million on its credit card warehouse line[18] - Cost of Debt for Q1 2024 was 7.5%, up from 5.2% in Q1 2023; Debt-to-Equity was 7.3x, compared to 6.4x in the prior-year quarter[18] Financial Outlook for Second Quarter and Full Year 2024 Oportun raised its full-year 2024 guidance, projecting Total Revenue of $985-$1,010 million and Adjusted EBITDA of $80-$90 million Financial Guidance | | 2Q 2024 | Full Year 2024 | | :--- | :--- | :--- | | Total Revenue (in millions) | $245 - $250 | $985 - $1,010 | | Annualized Net Charge-Off Rate | 12.4% +/- 15 bps | 11.9% +/- 50 bps | | Adjusted EBITDA (in millions) | $14 - $17 | $80 - $90 | Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2024, including the Statement of Operations, Balance Sheet, and Statement of Cash Flows Condensed Consolidated Statements of Operations For Q1 2024, Oportun reported total revenue of $250.5 million and a net loss of $26.4 million, a significant improvement from Q1 2023 Condensed Consolidated Statements of Operations (in millions) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Total revenue | $250.5 | $259.5 | | Interest expense | $54.5 | $39.0 | | Net decrease in fair value | $(116.9) | $(215.7) | | Net revenue | $79.2 | $4.8 | | Total operating expenses | $109.6 | $146.3 | | Net loss | $(26.4) | $(102.1) | | Diluted Loss per Share | $(0.68) | $(3.00) | Condensed Consolidated Balance Sheets As of March 31, 2024, total assets were $3.28 billion, total liabilities decreased to $2.90 billion, and total stockholders' equity declined to $382.0 million Condensed Consolidated Balance Sheets (in millions) | | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total assets | $3,277.5 | $3,411.9 | | Total liabilities | $2,895.5 | $3,007.5 | | Total stockholders' equity | $382.0 | $404.4 | Condensed Consolidated Statements of Cash Flows For Q1 2024, net cash provided by operating activities was $85.9 million, while net cash used in financing activities was $131.8 million Condensed Consolidated Statements of Cash Flows (in millions) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $85.9 | $76.8 | | Net cash provided by (used in) investing activities | $36.5 | $(39.6) | | Net cash used in financing activities | $(131.8) | $(39.1) | | Net (decrease) in cash | $(9.5) | $(1.9) | Key Performance Metrics This section highlights key operational and portfolio metrics, including Aggregate Originations of $338.2 million and a Portfolio Yield of 32.5% Consolidated Key Performance Metrics | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Aggregate Originations (in millions) | $338.2 | $408.0 | | Portfolio Yield (%) | 32.5% | 31.4% | | 30+ Day Delinquency Rate (%) | 5.2% | 5.5% | | Annualized Net Charge-Off Rate (%) | 12.0% | 12.1% | Other Metrics (in millions) | | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Managed Principal Balance at End of Period | $3,027.5 | $3,281.9 | | Owned Principal Balance at End of Period | $2,752.4 | $3,005.0 | | Average Daily Principal Balance | $2,851.7 | $3,069.9 | Non-GAAP Financial Measures and Reconciliations Oportun provides definitions and reconciliations for its non-GAAP financial measures, with updated calculation methodologies for better alignment with internal performance views About Non-GAAP Financial Measures This section defines non-GAAP measures like Adjusted EBITDA and Adjusted Net Income, explaining adjustments for non-cash and non-recurring items to clarify core business performance - Beginning with Q1 2024, the company updated its calculation of Adjusted EBITDA and Adjusted Net Income; prior period non-GAAP measures have been updated for comparability[44] - Adjusted EBITDA is used to evaluate operating results by removing the effect of income taxes, certain non-cash items, interest on corporate financing, non-recurring charges, and fair value mark-to-market adjustments[45][47] - Adjusted Net Income excludes the after-tax impact of non-cash stock-based compensation and certain non-recurring charges to measure operating performance[46] Reconciliation of Non-GAAP Financial Measures This section provides detailed tables reconciling GAAP metrics to their non-GAAP counterparts for Q1 2024 and Q1 2023, including Net Loss to Adjusted EBITDA and Adjusted Net Income Reconciliation of Net Loss to Adjusted EBITDA (in millions) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income (Loss) | $(26.4) | $(102.1) | | Adjustments | $28.3 | $81.9 | | Adjusted EBITDA | $1.9 | $(20.2) | Reconciliation of Net Loss to Adjusted Net Income (in millions) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net income (Loss) | $(26.4) | $(102.1) | | Adjustments | $31.4 | $44.4 | | Adjusted Net Income (Loss) | $3.6 | $(57.7) | Reconciliation of GAAP EPS to Adjusted EPS | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Diluted earnings (loss) per share | $(0.68) | $(3.00) | | Adjusted Earnings (loss) Per Share | $0.09 | $(1.70) | Reconciliation of Forward-Looking Non-GAAP Financial Measures This section reconciles the company's forward-looking guidance for Adjusted EBITDA to the nearest GAAP measure, Net Loss, for Q2 and full year 2024 Reconciliation of Forward-Looking Adjusted EBITDA Guidance (in millions) | | 2Q 2024 (Low-High) | FY 2024 (Low-High) | | :--- | :--- | :--- | | Net (loss)* | $(13.6) - $(11.3) | $(36.6) - $(28.2) | | Adjustments | $27.6 - $28.3 | $116.6 - $118.2 | | Adjusted EBITDA | $14.0 - $17.0 | $80.0 - $90.0 | - The company notes that it is unable to precisely forecast fair value mark-to-market adjustments, which could impact GAAP net income (loss); the provided GAAP net loss guidance assumes no change in these adjustments[61]